Study On Directors’ Call-up Obligations

With the promulgation of the Company Law in 2013,China’s capital system has officially become a full subscription capital system,and the period for shareholders to contribute capital is no longer legally limited,but is completely agreed upon by shareholders and the company in the articles of association,and the shareholders’ "subscription but non-payment" and the company’s insufficient capital have become major problems facing the company.The "South Mountain Technologies,LTD.Case" heard by the Supreme People’s Court made it clear that directors have the obligation to call up,and in case of violation,they must bear corresponding compensation liabilities,thus triggering heated discussions about directors’ call-up for capital contributions.The newly released Draft Company Law in 2021 also makes further provisions on the callup for capital contribution.There are growing calls for improving the system of call-up for capital contribution collection and improving the responsibility mechanism.However,the imperfection of the legal provisions and the lack of cases related to judicial practice caused by it are still a major obstacle to realizing the call-up for capital contribution,ensuring the adequacy of the company’s capital,and safeguarding the interests of the company and third parties.Under the current development central trend of corporate governance of Board of directors,this paper focuses on the directors’ callup obligations and their liabilities.The first chapter discusses the related basic theories from the necessity and feasibility of directors’ call-up obligations.First of all,due to the lack of a supporting capital supervision system under the full subscription system,there is a institutional risk that shareholders’ failure to fulfill their investment obligations will lead to insufficient capital of the company and damage the legitimate rights and interests of the company,creditors and minority shareholders.It is not convenient to apply the external call contribution,and it is efficient and convenient for the directors to call contribution,which is beneficial to the concrete development of the directors’ duty of diligence.Secondly,the shareholder’s obligation to contribute capital has the compound attribute of contractual and legal nature,and there is an imbalance between the shareholder’s term interest and the interests of the company and the third party,therefore,it has a legal basis to realize the benefit balance through the directors call for contribution to limit the shareholders’ investment obligation.In addition,due to the directors’ duty of diligence and the requirements of corporate autonomy,it is feasible for the directors to call for contribution.The second chapter studies the specific content of directors’ call-up obligations from the perspective of comparative law from both substantive and procedural provisions.From the point of view of entity regulation,firstly,the applicable object of director’s reminder in our country is not clearly defined,which includes the shareholder of increasing capital,the shareholder of holding non-paid shares abroad generally,and the issue of original shareholder’s reminder in the transfer of shares is specially stipulated in Germany.Secondly,the application of director’s call in our country is simple,including only the case of the term of capital contribution to the end,combining the relevant provisions of Britain,America and Germany,the case of the term of capital contribution not to the end can be applied and classified.From the point of view of procedure,the procedure for directors to call for contribution is not clear and specific in the view of comparative law.The third chapter discusses the director’s liabilities of violating the obligation of contribution.First of all,China’s provisions of liabilities to the company and creditors,there is a problem of excessive liabilities of directors.Secondly,China’s liabilities for the contribution of the form of unclear definition,in practice,there are disputes about the liabilities for compensation for tort and the liabilities for joint and several compensation of capital contribution.Finally,the traditional determination of directors’ liabilities for tort is too strict in the judgment of directors’ call-up,which neglects the negative effect of the omission,and cause difficulty in determining the outcome of corporate damage and the elements of causation,so it is necessary to clarify the determination of directors’ liabilities according to the determination of tort liability.The fourth chapter puts forward the corresponding legislative suggestions for the above-mentioned problems and experience inspiration.Firstly,it applies to all unpaid shareholders and the cases of unexpired benefits are subdivided into statutory cases of non-payment of debts,cases of contractual agreement and exceptions to statutory authorized board resolutions.According to the revision of The Draft of the Company Law,the procedure should be established in two aspects: decision-making and execution.Secondly,the director should bear the tort liabilities of the right of recourse to the company if he fails to call for contribution.The specific behavioral elements are divided into director’s actions and omissions,and the causal relationship exists between the loss suffered by the company due to insufficient capital and the director’s negligence,as for the subjective elements,the judgment standard should in principle apply the objective review standard of "rational third party".When it comes to the making of business decision,the judgment of directors’ behavior and the reduction of liability should be made according to the elements of business judgment rule.